Microsoft Offers $500 Vista PC in India

Microsoft Corp. will sell "affordable" Windows computers aimed at students in India, but the $500 price tag is more than what U.S. consumers might pay for a basic laptop.

Microsoft, with chip-maker Advanced Micro Devices Inc. and Indian PC maker Zenith Computers Ltd., said the $500 "IQ PC" runs the most basic version of the Windows Vista operating system and comes packed with the Office suite and programs to help students practice English and prepare for exams. The computer and related online content will be available in Bangalore and Pune on Sunday.

In a blog post, Orlando Ayala, a senior vice president for Microsoft's emerging segments market development group, described the computer as "low cost" and "affordable."

"If they're selling $500 computers in India, that doesn't sound like a big change to me," said Wayan Vota, director of IESC Geekcorps, a Washington, D.C. organization that works on technology projects in developing countries. Vota said that in India, computers can be had for $300, and that for the IQ PC, "The cost is still a barrier to families outside the elite middle class of the developing world."

The price seems high especially when compared with another project to bring low-cost computers to poor children around the world. One Laptop Per Child's XO notebook computer is expected to cost about $175, but several factors set the two initiatives apart, said Josh Bernoff, an industry analyst at Forrester Research.

Microsoft is still dealing with the middleman costs of manufacturing and distribution that One Laptop Per Child, a nonprofit group that plans to sell directly to governments, is able to avoid, Bernoff said.

The analyst also said the IQ PC may benefit from the higher price tag, given its targeted users.

"The middle class there doesn't want (India) to be considered a poor and undeveloped nation," Bernoff said. "If you want to grow up to be somebody working in a call center, somebody learning English and doing software development and other professional work in an outsourced environment, you probably want to start on a Microsoft PC," he said.

The IQ PC sounds like something an American could pick up at a Best Buy store, with a gigabyte of RAM, an 80-gigabyte hard drive and an AMD Athlon dual-core processor. Bernoff said Microsoft wants to boost its base of people using Vista, rather than offer a lower powered -- and lower priced -- Windows XP-based computer.

AMD, which makes processors for both the IQ PC and the One Laptop Per Child computer, said both types of efforts are useful in getting more people connected to technology and the Internet.

"There's no silver bullet, no single type of device that can reach all the different audiences under all the different demands in different geographies," said Travis Bullard, an AMD spokesman.